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IPFS News Link • Employment & Jobs

How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?

•, By Mish

Birth-Death Adjustment Yet Again

The above statement by Peter Schiff and similar statements by others are false. Schiff should know better. Even prominent economists make the same mistake.

Unfortunately, others repeat this stuff over and over without anyone doing any basic research that immediately disproves the claim.

I will go over the details of why Schiff is wrong, but first let's discuss the process. Here is a link to a BLS discussion of the Birth-Death Adjustment model.

The birth-death model pertains to the birth and death of corporations not individuals. When corporations go into business they add workers and those workers are not in the BLS sample. So the BLS uses these birth-death adjustments to tweak its monthly jobs reports.

If this seems totally convoluted, it's because it is totally convoluted.

Instead of relying on tax data, the BLS relies on the model. The BLS rationale is that not everyone reports tax data in the reference week, once a month, that determines the report.

The reference week and the relatively small sample vs quarterly reports are sources of error. In general, people do not look at the quarterly reports because they prefer the instant gratification of highly suspect numbers.

I discuss quarterly numbers below, but first let's continue with other sources of error in the monthly reports.